Quest Diagnostics 1997 Annual Report Download - page 13

Preferred Partner with Large Buyers
Our accumulated knowledge and experience gives us a unique capability when it comes to helping
large health care organizations take better care of their patients.
As government and private payors continue to squeeze costs out of the nationÕs health care
system, providers are forced to become more efficient while at the same time complying with a
myriad of rules and regulations. Hospitals and physician practices hope to gain efficiencies as they
consolidate to form integrated health care delivery networks. At the same time, managed care
companies and group purchasing organizations are trying to maintain quality care as they search
for new ways to cut their costs.
We are helping large buyers through our ability to develop a wide range of innovative collabora-
tions. We believe that we are building competitive advantage through unique partnerships
designed to reduce costs and improve lab quality and service, while adhering to a policy of total
compliance with all applicable government rules and regulations.
Ten years ago we were asked to streamline and manage a laboratory system shared by two
competing hospitals in Erie, Pennsylvania. Today, that lab network serves 19 hospitals in Western
Pennsylvania and Southwestern New York. In Nebraska, we manage inpatient and outreach labs
for 25 hospitals and provide outsourcing arrangements.
Last summer, we announced the formation of an equity joint venture with Samaritan Health
System, ArizonaÕs largest health care delivery system, to pursue opportunities in diagnostic testing,
information and services throughout Arizona. Both partners have contributed their existing
commercial labs, and integration will occur by the end of 1998. The joint venture, Sonora Quest
Laboratories, is now the leading provider in the market.
We are involved in active discussions with hospital networks and other large buyers of health
care services throughout the country.
Partnering for Mutual Benefit
We are helping the U.S. Department of Veterans Affairs create an integrated delivery network.
The VA Great Lakes Health Care System, with eight hospitals and five clinics in Northern Illinois,
Wisconsin and the Upper Peninsula of Michigan, is sending us specimens for routine and esoteric
reference lab testing, and is also purchasing our logistics services as the glue that connects the
facilities to form a truly integrated network.
ÒBefore this, we had eight disassociated facilities that were often related just by name,Ó said Joan
Cummings, M.D., Network Director for the VA Great Lakes Health Care System. ÒThe agreement
with Quest Diagnostics is more than a contract, it is a partnership.Ó
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ÒBefore our partnership with
Quest Diagnostics, we had eight
disassociated facilities that
were often related just by
name,Ó said Dr. Joan Cummings,
Network Director for the U.S.
Department of Veterans AffairsÕ
Great Lakes Health Care System.